TI to buy back stock, hike dividend

Tech giant sets up to $5 billion in additional repurchases

By

MattAndrejczak

SAN FRANCISCO (MarketWatch) -- The board of Texas Instruments Inc. authorized further funds for stock repurchases and hiked the cell-phone chipmaker's cash dividend for the second time this year, sending TI's shares higher Friday.

The world's No. 3 chipmaker by revenue, Dallas-based TI
TXN, -3.30%
said it plans to buy back up to $5 billion in common stock and lift its quarterly dividend by 25%.

The new dividend equals 10 cents a share, or 40 cents a share on an annual basis. It will be paid Nov. 19 to stockholders of record on Oct. 31.

The TI board has now declared dividend increases for four straight years.

"We believe the announcement may suggest some confidence in the business outlook and may help bolster investor sentiment," said Lehman Bros. analyst Tim Luke, who reiterated his overweight rating on TI shares and $41 a share price target.

TI's shares rose 2.4% to $36.62. They're up 27% for the year to date.

Despite the stock's gains this year, TI said it believes its stock "represents significant value" at current share prices.

High-tech giants have been active buyers of their own shares this year.

IBM Corp.
IBM, -1.04%
added $15 billion to its current repurchase program, while Hewlett-Packard Co.
HPQ, -2.52%
raised its buyback by $8 billion and Cisco Systems Inc.
CSCO, -1.29%
has done the same to the tune of $5 billion.

Meanwhile, TI's smaller rivals -- National Semiconductor Corp.
NSM
and Analog Devices Inc.
ADI, -4.43%
-- have both announced buybacks for more than $1 billion.

TI has been an aggressive buyer of its stock since September 2004. During that time, TI has authorized $20 billion worth of repurchases, reducing TI's shares outstanding by 17% as of June 30.

TI still has board authorization to buy stock under a prior repurchase program. That authorization stood at $3.8 billion at the end of the second quarter, the company said.

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